Jim Chalmers told Australian Business Economists that the National Productivity Fund was “all about rewarding states with more revenue, where they deliver meaningful and measurable economic reforms”. Photo: Jim Chalmers X.
States and territories will be able to grab a slice of a new $900 million funding program aimed at boosting productivity in housing construction and other building sectors, if they come to the party on the Federal Government’s terms.
To qualify for the grants, state and territory governments must adhere to policies that reduce red tape in housing construction and overly bureaucratic practices in the building industry generally.
Federal Treasurer Jim Chalmers has unveiled his plan to reward states and territories that embrace an approach to more modern housing, including cheaper modular homes, as a way to tackle the housing crisis engulfing the nation.
He used his keynote address at an Australian Business Economists luncheon on Wednesday (13 November) to announce the Federal Government’s National Productivity Fund.
“It’s all about rewarding states with more revenue, where they deliver meaningful and measurable economic reforms,” Dr Chalmers said.
“There is no more important structural problem in our economy than productivity – no higher priority for reform.”
The Treasurer acknowledged that productivity growth over the past decade has been the lowest in 60 years, remaining at 2016 levels.
He said almost half of the downgrade is due to the “changing mix” of industries in the national economy.
“This is partly linked to more people working in services industries where productivity typically grows more slowly, as Australians earn more and live longer, healthier lives,” Dr Chalmers said.
“Weaker investment also played a role in our dismal decade for productivity.”
The Treasurer has offered states and territories what he described as a “menu of approved projects”, which is yet to be fully developed, for them to qualify for the new funding.
Slashing red tape of housing construction is a high priority on that list, to ease up on zoning restrictions, streamline planning requirements, and be more innovative in introducing modern construction methods.
Two policies to be prioritised will be the adoption of trusted international product safety standards and the development of a general “right to repair”.
Dr Chalmers said both initiatives could boost housing supply as well as the building industry, which is struggling with labour shortages and surging costs of building materials.
“This will incentivise states to achieve productivity gains through pro-competitive policies, choosing from a menu of options,” the Treasurer said.
“It’s all about rewarding states with more revenue, where they deliver meaningful and measurable economic reforms.”
Increasing competition is a key priority, with the Treasurer hoping to fast-track reforming of the National Competition Policy.
The Treasurer will meet with state and territory counterparts on 29 November to develop the menu of productivity reforms that will qualify for grants from the new fund.
Dr Chalmers also detailed some of the findings from the Productivity Commission’s latest modelling on the impacts of revitalising national competition policy.
The Treasurer commissioned that modelling himself.
It suggested a new push to boost national competition policy could spike Australia’s GDP by up to $45 billion annually and cut prices by 1.45 percentage points.
“The benefits on offer are substantial, if not staggering,” Dr Chalmers said.
“That GDP boost represents about $5000 per household per year.”
Legislation to deliver the $10 billion Housing Australia Future Fund recently passed the Federal Parliament.
Anthony Albanese said that the fund will help deliver 30,000 new social and affordable rental homes in its first five years.
This includes 4000 homes for women and children impacted by family and domestic violence and older women at risk of homelessness.
“The package of housing legislation passed by the parliament … also includes the National Housing Supply and Affordability Council Bill 2023, which will establish the National Housing Supply and Affordability Council as an independent statutory advisory body,” the Prime Minister said at the time.
This latest announcement from the Treasurer is the fourth time this Labor Federal Government has attempted to encourage states and territories to enact policies aimed at easing the housing crisis.
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